5.5 P RESENTATION AND ANALYSIS OF RESULTS ACCORDING TO THE O BJECTIVES OF THIS STUDY
5.5.2 Objective 1: To examine the challenges faced by SMEs in Zimbabwe
5.5.2.1 Descriptive of challenges faced by SMEs in Zimbabwe
There are 11 challenges singled out in the National Policy and Strategy for SMEs as the major constraints to the growth of SMEs in Zimbabwe (National Policy and Strategy for SMEs in Zimbabwe, 2002:3). These challenges as well as the extent to which respondents agreed that these are challenges in their business are presented in table 5.6. This is in line with addressing the second objective of this study which sets out to identify the challenges faced by SMEs in Zimbabwe.
Table 5. 6 Challenges faced by businesses
Strongly Disagree Disagree Neutral Agree Strongly Agree
Limited access to finance 3.7% - 5.5% 34.8% 56%
Cost of finance 1.9% - 14.8% 33.3% 50%
Lack of marketing skills 4.6% 20.2% 28.4% 37.6% 9.2%
Lack of market knowledge 9.3% 20.4% 23.1% 32.4% 14.8%
Lack of access to infrastructure 7.3% 13.8% 18.3% 36.7% 23.9%
Lack of access to land 11% 15.6% 33.9% 22.9% 16.5%
Inappropriate technology 11.9% 14.7% 20.2% 29.4% 23.9%
Lack of information 11% 22% 26.6% 23.9% 16.5%
A hostile regulatory environment 2.8% 7.3% 15.6% 38.5% 35.8%
Inadequate management skills 15.7% 34.3% 19.4% 24.1% 6.5%
Inadequate Entrepreneurial skills 13.8% 28.4% 27.5% 24.8% 5.5%
Most of the respondents in this study strongly agreed that limited access to finance has been a challenge to their business. 56 percent of the participants strongly agreed that the limited access to finance has been a challenge for the operations of their business. 34.8 percent of the respondents in this study agreed that limited access to finance was a challenge. Most of the respondents in this study show that they have adequate entrepreneurial skills as only 5.5 percent strongly agreed that they had inadequate entrepreneurial skills as a challenge. In the case the
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Policy and Strategy Framework is appropriate to address limited access to finance as a market failure
There is an anomaly on the respondents’ views of the challenges presented to their businesses by limited access to finance and the cost of finance. None of the respondents disagreed that limited access to finance and the cost of finance were challenges. Equally interesting is the observation that while none of the participants disagreed that limited access to finance was a challenge 3.7 percent (n = 109) strongly disagreed that the same factor was a challenge for their business.
Experts were asked to weigh in on the challenges faced by small business and they offered the following qualitative insights:
“I think the most prevalent challenge faced by small business is the access to finance mostly because the sources of finance are limited due to this liquidity crisis we currently have in Zimbabwe. If there was enough capital I’m sure SMEs would thrive. I can say that finance is the biggest challenge. We also don’t have enough programmes to support this sector because of our limited capacity as organisations…”
“Government support is lacking even when they are aware that this is the only viable sector of the economy with industries closing. We’ve been asking government to create a legal framework as this would really assist the small business but we are yet to see this being passed. There are a lot of challenges that such a framework can resolve such as the lack of capital, this one is a serious concern…we are either denied loans or they are too expensive to pay them back.”
Two experts gave different views of the challenges faced by small business however there seems to be an agreement that small businesses in Zimbabwe are facing the challenges of limited access to finance and the cost of finance. The second expert revealed that there is need for legal framework to resolve the challenges that are faced by small businesses. In this case, one can argue that small businesses face financial challenges and a hostile regulatory environment.
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Table 5.7 will be used to buttress the discussion on the challenges faced by SMEs in Zimbabwe by comparing the means of the challenges. The higher the mean the more the item is identified as a challenge for SMEs. The higher the median the more the respondents that strongly agree with the item being a challenge for SME
Finance is the most common challenge faced by SMEs in Zimbabwe with most respondents identifying limited access to finance as a huge challenge, shown by a mean of 4.39 and a median of 5.00 showing that the majority of the respondents strongly agreed that the limited access to finance was a challenge for their business. This is followed by the cost of finance at 4.30 and a median of 4.50. Skills presented the least of challenges for most of the respondents in this study as shown by the fact that inadequate management present the least challenge with a mean of 2.69, followed by inadequate entrepreneurial skills which has a mean of 2.80.
Table 5. 7 Descriptive of the challenges faced by SMEs in Zimbabwe
Challenges Mean Median Missing Valid N
Limited access to finance 4.39 5.00 1 109
Cost of finance 4.30 4.50 2 108
Lack of marketing skills 3.27 3.00 1 109
Lack of market knowledge 3.20 3.00 1 109
Lack of infrastructure 3.56 4.00 1 109
Lack of access to land 3.18 3.00 1 109
Inappropriate technology 3.39 4.00 1 109
Lack of information 3.13 3.00 1 109
Hostile regulatory environment 3.97 4.00 1 109
Inadequate management skills 2.69 2.00 1 109
Inadequate entrepreneurial skills
2.80 3.00 1 109
Factors such as the lack of information, lack of land and inappropriate technology present the least of challenges to most of the respondents in this study. Most of the respondents strongly
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disagreed that these factors were challenges faced in their businesses. An interesting trend is that 50.1 percent of the respondents in this study either strongly disagreed or disagreed with the assertion that the lack of managerial skills was a challenge for their enterprise. Figure 5.6 is a presentation of the frequencies of responses to inadequate management being a challenge.
Figure 5. 6 Frequencies of responses to inadequate management skills as a challenge
Combining the percentage of respondents who strongly disagreed and who disagreed that inadequate management skills was a challenge shows the percentage of SMEs that have adequate management skills. The bar graph shows that 19.44 percent were neutral about the challenges posed by inadequate management skills; 24.07 percent of the respondents agree that inadequate management skills presents a challenge for their business and 6.48 strongly agreed that
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inadequate management skills are a challenge. Therefore, the Policy and Strategy framework is necessary to address inadequate management skills as a market failure and challenge. The Appropriateness of the policy is shown by the fact that business linkages were put in place as solutions to this challenge